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Small is Beautiful: Motivational Allocation in the Non-Profit Sector

Listed author(s):
  • Gani Aldashev
  • Esteban Jaimovich
  • Thierry Verdier

We build an occupational-choice general-equilibrium model with for-pro t rms, non-pro torganizations and endogenous private warm-glow donations. Lack of monitoring on the use offunds implies that an increase of funds of the non-pro t sector (because of a higher incomein the for-pro t sector, a stronger preference for giving, or an inow of foreign aid) worsensthe motivational composition and performance of the non-pro t sector. We also analyze theconditions under which donors (through linking donations to the motivational composition of thenon-pro t sector), non-pro ts themselves (through peer monitoring), or the government (usinga tax- nanced public funding of non-pro ts) can eliminate the low-e¤ectiveness equilibrium. Wepresent supporting case-study evidence from humanitarian emergencies and developing-countryNGOs.

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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers ECARES with number ECARES 2016-02.

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Length: 62 p.
Date of creation: Jan 2016
Publication status: Published by:
Handle: RePEc:eca:wpaper:2013/223267
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